Vacancies growing but bosses can't get the staff as placements fall in London

Fears about the state of the jobs market have been raised after new research among hundreds of recruitment agencies revealed mixed messages over the strength of the economy.

Vacancies are rising at their fastest rate for almost two years, but positions are being filled at a slower rate, said the report by KPMG and the Recruitment & Employment Confederation (REC).

A study of 400 recruitment and employment consultancies showed that the availability of permanent staff fell last month for the first time since last April.

The Midlands and the South of England were said to be performing well on jobs, but there was a drop in placements in London.

Bernard Brown, of KPMG, said: "It's concerning to see the pace of recruitment slowing. Job placements may still be moving in the right direction but questions must now be asked about whether the declining rate of growth is indicative of a longer-term problem.

"It seems that the time lag many economists spoke about towards the end of last year is shrinking, as employers delay decisions until they have more certainty about the economy."

REC chief executive Kevin Green said: "We've now had three months of uninterrupted growth in people finding permanent jobs through recruitment agencies and five consecutive months of growth in temporary job placements.

"It's another milestone for the UK labour market, which hasn't seen a full quarter of simultaneous increases in both temp and permanent job placements since mid-2011.

"It's also further confirmation of the continued strength of our flexible labour market in keeping people in employment."

A separate report by insurance firm Aviva showed that around half of business owners who launched their company in the past two years are planning to expand.

A study of 500 owners of small to medium-sized enterprises revealed that those with fewer than 25 employees were most optimistic.

Aviva spokesman David Bruce said last year's Olympics and Diamond Jubilee celebrations had driven a renewed sense of optimism in the UK.

Business rates, red tape and bank lending were among the main issues highlighted by the study.